Public D2C brands fail, ecomm declines in the UK, and more | D2C Digest

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🫢 SmileDirectClub's Bankruptcy, Blue Apron's sale, and others might follow

These are hard times for the D2C…

Two major D2C companies recently went bankrupt or sold for a fraction of their former value. And many say this trend is likely to continue.

You all know Smile Direct Club, the company that offers aligners that straighten its clients’ teeth according to their unique, doctor-directed treatment plan.

They filed for bankruptcy on Friday, plummeting from a $9 billion IPO valuation in 2019 to nearly nothing. The company will wait for a rescuer, and liquidate if no buyer shows up.

Also on Friday, Blue Apron, a meal kit D2C based in NY, announced its sale for $103 million, starkly contrasting its peak valuation of over $3 billion, representing a 97% drop.

According to Ben Cogan, founder of Agore ecommerce aggregator, 3 things lead to the eventual demise of a public company:

1) Lack of profitability
2) Declining revenue
3) A market capitalization below approximately $200 million.

Applying this to other D2C brands, he believes other public D2C brands like Allbirds, Rent the Runway, and Bark might not survive as a public company.

Should we anticipate more D2C brands to fail?

📉 Decline of ecommerce in the UK

According to Franz Purucker, co-founder of Hive, the ecommerce sector e-commerce declined by approximately 10% last year in the UK.

Franz said, part of this decline could be attributed to a return to normalcy after the pandemic surge as the long-term trend still shows promise with a >5% CAGR in the UK and >15% in emerging markets. But it’s for sure that there are deeper factors affecting e-commerce growth, such as absurdly high marketing costs and frustrated customers negatively affected by high costs of living.

Several top D2C founders took proactive steps over a year ago by investing in or shifting towards diversified channels, including B2B, retail, wholesale, and marketplaces.

Notably, some D2C brands such as Horl 1993 and Hello Klean have thrived by expanding their sales into challenging retail stores like Selfridges.

2 weeks ago, Hello Klean’s founder Omer Ozener mentioned that the company found a huge success in Selfridges, beating their target by 5 times!

Do you think more D2C brands will shift to physical retailing?

X CEO Yaccarino shared data about the rise of video

According to Social Media Today’s news item, X CEO Linda Yaccarino shared some insights at the Khanference Conference in Dallas. And we thought these could give D2C founders something to think about.

• Users spend 14% time on X

• Video consumption has increased by 20%

• Almost 200 million Gen Z users log into the X app monthly, constituting almost 40% of the platform’s total active users.

So why don’t you use this as an opportunity to work more on your video content for X?

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